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Chinese Solar Powers Up: Lessons for the Wind Energy Industry

Posted on November 29, 2010 by Josh Lutton

We recently looked at the overseas penetration of Chinese solar photovoltaic module makers to see if there might be lessons for the wind turbine industry.  Chinese solar PV module manufacturers have rapidly increased their overseas market share.  For example, they have increased from 0% to over 30% of the California solar market in three years, and have seen similar market share gains in Germany.  Moreover, Suntech, a Chinese PV manufacturer, rated #1 in consideration rate in our recent U.S./Europe survey of solar buyers.

In contrast, the overseas penetration of emerging wind turbine manufacturers has been much more muted.

Six main factors account for the growth of the PV module makers:

  1. Cost leadership
  2. They entered market when supply was tight
  3. Solar modules are (relatively) simple, modular, and scalable, which makes entry easier for new entrants
  4. PV modules viewed as commodity-like
  5. The executive teams of the leading Chinese solar manufacturers have extensive experience outside China
  6. As businesses, the leading Chinese PV makers are relatively transparent to those outside China

The implications for wind turbine manufacturers heading into new regions are:

  1. Expect new market penetration will take a long time due to need for an operating track record.  It may be a long time before local manufacturing capacity is required
  2. Purchasing projects or doing project development can get beyond bankability issues
  3. Developing local engineering and support capabilities should be high priority in overseas expansion
  4. Certain partnerships could accelerate progress and increase probability of success
  5. Prioritize markets appropriately

Download our detailed analysis here.

Solar Photovoltaics: A High Tech Commodity

Posted on November 29, 2010 by Josh Lutton

A short while ago we interviewed about 20 utility- and commercial-scale solar developers and integrators in the U.S. and Europe and found little relationship between developers’ willingness to consider modules and the manufacturer’s home country. In fact, Suntech, a Chinese company, was #1 in consideration rate. Interviewees also generally saw solar panels as commodities, and we found that the distribution of returns in this industry is similar to commodity industries.

While there may be a few ways firms can differentiate themselves, these are likely to make a marginal difference and are best suited to firms with a particular (narrow) niche. Therefore, we conclude that driving down cost is the most important predictor of success.

Download our findings and recommendations here.

Analytical Strategy: Optimizing the Value of Your Customer Base

Posted on July 21, 2010 by Josh Lutton

We recently advised telecommunications operators on the use predictive modeling of customer lifetime value and expected loyalty to improve retention, make the most efficient use of resources, and improve profitability.

Review a summary of these ideas here.

Playing Last Year’s Game: Why Companies Fail to Change

Posted on July 8, 2010 by Josh Lutton

In our work as management consultants, we help clients improve their businesses by working with them on strategy, operations, and financial matters.  Unfortunately, we’ve also seen things go horribly wrong.

One enterprise-threatening pitfall we’ve seen companies make is failing to act when the competitive game is changing.  Companies in this situation are playing last year’s game when they should be focused on the future.  This situation is distressingly common—Motorola, Schwinn, and Polaroid are three well-known examples—but also avoidable.  In this paper we discuss why some companies fail to respond effectively to changes in their business environment and what other companies can do to avoid the same fate.

[Read more…]

Success in a Rapidly Changing TV Market

Posted on May 5, 2010 by Josh Lutton

Given all the hype about internet TV, we thought it would be useful to take a look at the underlying drivers of uncertainty to see why the ultimate outcome hasn’t been totally obvious. We developed four scenarios for the outcome and conclude that unless internet TV properties such as Hulu and Google TV are able to offer ad rates significantly higher than is the norm on conventional TV, much content is likely to stay behind pay walls at large traditional video distributors such as Comcast, Verizon, and DirecTV.

See our four scenarios here.

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